Switzerland Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in Switzerland and employment contracts.

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Expanding into Switzerland generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Switzerland Visas, Work Permits and Migration

Switzerland is one of the most desirable places for people to live and work. It has an exceptional economy with first class workforce and a politically secure environment. Its citizens enjoy a high standard of living, and the business framework provides an ideal location for innovation allied to financial stability. Switzerland is not a member of the European Union (EU) – however, it is a member of the European Free Trade Association (EFTA) and part of Europe’s ‘single market.’

As with all countries, there are rules regarding living and working in Switzerland and quotas regarding permits for Third Country Nationals as well as some EU/EFTA citizens. EU and EFTA nationals have freedom of movement which allows them to enter the country to visit, live and to look for work.

Expert help can make life easier and less costly with staff in place and ready to work in days rather than the weeks or months it could take. Bradford Jacobs with its Professional Employer Organization (PEO) specialists and Employer of Record (EOR) platforms, has 20 years’ experience in immigration law and obtaining the correct documentation e.g., residence /work permits and visas as well as all aspects of setting up businesses globally.

What Types of Work Visas, and Permits for Switzerland are there?

Different factors are involved when applying for a permit to live and work in Switzerland including qualifications and quotas. The Residence Permit or “autorisation de séjour” acts as a residence and work permit and is issued as a biometric card.

Switzerland operates a dual system when it comes to employing people from abroad:

  1. European Union (EU) and the European Free Trade Association (EFTA) countries
  2. All other nationalities (Third Country Nationals, TCNs)

EU and EFTA countries’ nationals have the right of free movement within Switzerland to seek work or establish their own businesses and do not require a visa or work/residence permit to enter the country. However, they should be looking for work and be registered with an employment center with a good chance of finding employment.

TCNs wanting to work in Switzerland, a Biometric Residence/Work Permit is required and a National D Visa for long term stays.

Visas

There are also agreements with other countries, giving their citizens the right to enter Switzerland visa-free for 90 days in a 180-day period for visits, cultural or business trips. This depends on the nationality.

Similarly, if foreign nationals have a Schengen visa from another EU country or one of the relevant permits issued by Switzerland, they need not to apply for a tourist visa.

TCNs not exempt however do require a Schengen visa to visit for less than 90 days, which can be applied for online, and a D Visa for more than 90 days that can be applied for in the home country from a local Swiss Embassy or Consulate or their official representative.

System for working in Switzerland:

  1. EU/EFTA nationals:
  2. Do not require a visa to enter the country
  3. Can enter and work for three months (in any calendar year) without a Residence Permit but employers must notify the canton in which the person will be working. If entered before getting a job, they must notify the authorities at the canton within 14 days of arriving. There are 26 cantons in Switzerland
  4. Require a Residence Permit for longer than three months employment from the canton where the worker is living, before they start work. A local employment contract is required
  5. TCNs
  6. An employment offer / contract is required
  7. A valid entry D (Work) visa
  8. A work permit/residence permit which is applied for by the employer to the labor market authorities in the relevant canton. The position is offered first to EU/EFTA employees, priority given to Swiss nationals

The relationship between the worker and the company is called ‘Commencements of Work’ and require a job offer and contract with a Swiss registered company.

A Posting (external assignment) is where a person goes to Switzerland to work on a particular project for his company and continues with the contract from the home country.

Permits depend on a number of factors:

  • Employee’s nationality: There are different routes for EU/EFTA/TCNs
  • Category of employment: Non-EU/EFTA workers need to have certain qualifications or professional experience and fall into one of the following groups:
  • Managers
  • Specialists
  • University graduates with professional experience
  • Language: It may be necessary to speak one of French, German, or Italian

Category of Work / Residence Permits for EU/EFTA Nationals – who have the right of free movement. Local employment contracts are not subject to quota permits.

  1. Short-term residence permits (L) for 12 months or less. This is generally issued when there is a work contract for between three to 12 months.
  2. Residence permits (B) for longer than 12 months. Can be valid for five years and provided the employment contracts continues, can be extended for another five years.
  3. Cross Border Commuters (G) are EU/EFTA citizens who live in an EU country but work in Switzerland.

Category of Residence/ Work Permits for NON – EU/EFTA Nationals

  1. L: Short term residence permit granted up to 12 months and is determined by the length of the employment contract and under certain conditions can be extended to two years for the same employer.
  2. B: Residence Permit initially issued for 12 months and can be renewed annually. It may limit where employees reside, and it can depend on changes in circumstances. It is tied to the employer who applies for the permit.
  3. C: Permanent Residence Permit granted after employee has been employed continuously in Switzerland for 10 years.

Quotas in 2021 for permits (as examples):

  • EU/EFTA citizens – Short Term Permit (L) quota 3,000 for service providers and posted workers but does not apply to those EU/EFTA nationals having a local contract
  • EU/EFTA citizens – Long Term Permit (B) quota 500 for service providers and posted workers but does not apply to those EU/EFTA nationals having a local contract
  • NON-EU/EFTA citizens – Short Term Permit (L) quota 4,000
  • NON-EU/EFTA citizens – Long Term Permit (B) quota 4,500

For Employers:

  • Must show that this position cannot be filled by a Swiss or EU/EFTA national
  • Provide the same working conditions and pay, as local employees
  • Need to apply for the appropriate work permit for the employee
  • Apply early before quotas run out
  • If an employee was granted a work permit that was not used, inform the relevant authority so this can be re-allocated

Switzerland Tax Laws

Dealing with tax, payroll, and employment regulations for your staff from overseas is always tricky and poses complications that demand expert guidance. Switzerland is no exception, with liability at federal, canton and municipal levels applying to personal and corporate taxation.

With over 20 years’ experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of taxation and employment law across the globe. Our ‘knowledge’ is vital for foreign companies expanding into Switzerland.

Switzerland has a complex and multi-layered tax system which operates federally with the Federal Tax Administration (FTA), plus individually through 26 cantons and local municipalities. Additionally, the Federal Social Insurance Office (FSIO) administers social security for a workforce that enjoys strong protection in terms of benefits and entitlements.

Overview of Taxes in Switzerland

Switzerland has a complex tax structure. Taxation is collected at federal level, by 26 individual cantons and also by municipalities. In some cases, the church also levies taxes. At the personal level there are different rates for single taxpayers, married couples or single taxpayers with children.

Personal Income Tax:

Federal taxes for single taxpayers have 11 bands beginning with a tax-free allowance up to CHF 14,500 (€14,000, US$15,830). Rates on the various taxable excesses range from 0.77% up to CHF 31,600 (€30,500, US$34,500) to a maximum 11.5% for income over CHF 755,200 (€728,966, US$824,393), although the previous tax band has a liability of 13.2%.

Federal taxes for married couples or singles with minor children have a tax-free allowance of CHF 28,300 (€27,316, US$30,890). Fourteen further tax bands reach a maximum 11.5% on income above CHF 895,900 (€864,760, US$977,730), although the previous tax band has a liability of 13% on taxable income.

Cantons add personal taxes to the federal levies. In Zurich canton, for example, single taxpayers’ liability begins at 2% on taxable income from CHF 6,700 (€6,466, US$7,312) through a further 11 bands to a maximum of 13% on income above CHF 254,900 (€246,034, US$278,218).

Additionally, in each of the 26 cantons the various municipalities also apply communal tax and church tax, if applicable. Overall tax burdens can therefore range between 22.5% and 45.5%.

Social Insurance Taxes:  Employers and employees equally share 10.6% of salary towards old age, survivors, and disability insurance; 2.2% towards unemployment insurance capped at CHF 148,200 (€143,061, US$161,676); 1% towards supplementary unemployment insurance above CHF 148,200. Additionally, employers contribute between 1% and 3% towards family compensation fund, uncapped; 0.17% and 13.5% to occupational insurance, capped at CHF 148,200. Employees contribute between 1% and 4% to non-occupational accident insurance.

Corporate income Tax (CIT): Companies are taxed federally at 7.83% on pre-tax profits and 8.50% after tax. Depending on location in Switzerland, total CIT from federal, cantonal, and municipal corporate taxes ranges between 11.9% and 21.6%. Federal liability is paid by March 31 of the following year, but deadlines vary between cantons. Resident companies are taxed on their worldwide income.

Withholding Tax (WHT):  Rates on dividends, royalties and interest vary between 0% and 35% depending on whether companies are resident or non-resident and any tax treaties with other countries.

Capital Gains Tax (CGT):  According to where companies are based in Switzerland, CGT rates vary between 11.9% and 21.6%.

Value Added Tax (VAT): A standard rate of 7.7%.

Net Wealth Tax (NWT):  This does not apply at federal level, but cantons and municipalities apply taxes between 0.15% and 1.01%.

Swiss Individual Tax – Single, Married

Tax liability is based on residency and with different regimes depending on marital and family status. Liability is at federal, cantonal, and municipal levels with the addition of church taxes where applicable. Residents are taxed on their worldwide income in a tax year running from January 1 until December 31, while non-residents are taxed on certain categories of income earned or accrued in Switzerland.

* As a guide these are selected amounts of taxable income that apply to federal taxation. In all cases, cantonal, municipal / communal taxes are added, plus church taxes in some instances.

In Swiss francs CHF, Euros and US dollars

Single taxpayers:

Tax-free allowance up to 14,500 (€14,000, US$15,830)
14,500 – 31,600 (€30,500, US$34,500): 0.77%
31,600 – 41,400 (€39,886, US$45,230): 0.88%
(Five further bands between 41,400 – 103,600 between 2.64% and 8.80%)
134,600 (€129,765, US$147,102) – 176,000 (€99,880, US$113,236): 11.0%
176,000 – 775,200 (€747,110, US$846,781): 13.2%
Over 775,200: 11.0%

Married taxpayers and single payers with minor children:

Tax-free allowance up to 28,300 (€27,284, US$30,928)
28,300 – 50,900 (€27,280, US$30,924): 1.00%
50,900 – 58,400 (€49,071, US$55,627): 2.00%
(11 further bands at 1.00% increments between 58,400 and 145,000 (€139,777 US$158,460)
1445,000 – 895,500 (€863,195, US$978,685): 13.0%
Over 895,500: 11.5%

Cantons add personal taxes to the federal levies. In Zurich canton, for example, single taxpayers’ liability begins at 2% on taxable income from CHF 6,700 (€6,466, US$7,312) through a further 11 bands to a maximum of 13% on income above CHF 254,900 (€246,034, US$278,218).

Additionally, in each of the 26 cantons the various municipalities also apply communal tax which, with church tax, can create total tax burdens between 22.5% and 45.5%.

Employee Social Insurance Contributions (as percentage of salary):
Insurance – Percentage: Cap
Old age, survivors, disability – 5.30%: No
Unemployment – 1.10%: CHF 148,200 (€142,687, US$161,700)
Supplementary unemployment – 0.50%: Above CHF 148,200
Non-occupational accident – 1.00%-4.00%: CHF 148,200

Employers deduct the employees’ share from their gross salary and remit to the social insurance authorities.

Switzerland Entity Set Up

Switzerland welcomes Foreign Direct Investment (FDI), with few controls apart from in certain sectors, such as banking, finance, and investment – areas where the Swiss have built an unrivalled global reputation. The Swiss ranked 20th globally with Gross Domestic Product (GDP) of 810.8 billion US dollars for 2021 and third in the world for GDP per capita at US$93,500.

A highly-qualified, well-educated workforce earning high wages to support an enviable standard of living add to the attractions for incoming investment – in addition to stunning landscapes of mountains, lakes, and forests.

Even so, expanding overseas is a major step, especially for companies considering opening a legal entity in their new territory. The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Switzerland – speedily and risk free.

How to set up a Switzerland Subsidiary

Setting up a subsidiary in Switzerland? First, choose a company type. Foreign companies wanting to hire staff and run payroll must establish a legal entity subsidiary in Switzerland. The usual choice is a Société á Responsabilité Limitée (SARL). In German cantons these are known as Gesellschaftmitbeschränkter Haftung (GmbH) and in Italian cantons as a Società a garanzia limitata (S.a.g.l). This company typegenerally has the characteristics of a private limited liability company and is regulated by the Swiss Company Act, which operates under the Swiss Code of Obligations.

The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Switzerland as a local company. Various documents and procedures must be completed to set up the subsidiary. These include:

  • Register the company name in the relevant canton’s Commercial Register (Registre du Commerce) which is published in the Swiss Official Gazette of Commerce
  • Deposit CHF 20,000 (€19,272, US$21,780) in a Swiss bank account prior to incorporation
  • Register at least one founder, an individual or entity, with no upper limit on numbers
  • At least one director with single signatory responsibility, or two directors or officers with joint signatory power, must be resident in Switzerland
  • A local legal representative
  • Local registered office
  • Notarized Articles of Association of the subsidiary in the relevant language for the canton, some of which allow documentation in English
  • Registration with the Federal Tax Administration for VAT if necessary
  • Relevant business licenses for area of operation

Benefits of setting up a Subsidiary in Switzerland

A Swiss subsidiary of a foreign parent company has its own legal identity in Switzerland. The parent company generally has no responsibility for the debts and liabilities of the subsidiary. The responsibility of the shareholders (or quota holders) is generally limited by the extent of their contribution. Also, the foreign parent company’s financial statements and accounts do not need to be presented to Switzerland Tax Administration authorities.

The subsidiary can operate under a different name to the parent company and pursue independent business activities.

Through its subsidiary, the parent company has the advantage of exploring the Swiss market and further afield among European nations. Although Switzerland is not a member of the EU it is part of the ‘single market’ and its citizens have the same rights to freedom of movement.

Other benefits for a subsidiary:

  • Easier to obtain regulatory approvals, loans and finance and enter contracts with other Swiss and European companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economies.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Switzerland.

The Swiss Market

Switzerland has an unrivalled global reputation for banking and finance. However, although the nation’s economic growth is driven by the financial sector, there are also thriving industries. These are built on manufacturing machinery, pharmaceutics, chemicals, textiles, precision instruments and tourism.

Switzerland welcomes Foreign Direct Investment (FDI) into the economy, which with a nominal GDP of 810 billion US dollars ranks the 20th highest in the world. In terms of personal wealth, Switzerland ranks third with GDP per capita of US$93,500.

It is home to many of the world’s major multi-nationals, but at the other end of the scale is a hot bed for start-ups, innovative company launches and Small and Medium Enterprises (SMEs).

Any incoming companies tempted to expand into the country will find that adjustments need to be made – and quickly. However, there are speedier and more cost-effective alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Switzerland.

Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilize our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Switzerland and how to navigate its challenging legislative issues that revolve around the Company Act, the Code of Obligations, and collective agreements.

Starting a Business in Switzerland

International companies opening a legal entity in Switzerland typically select a Société á Responsabilité Limitée (SARL). In German cantons these are known as Gesellschaftmitbeschränkter Haftung (GmbH) and in Italian cantons as a Società a garanzia limitata (S.a.g.l). This company form generally has the characteristics of a private limited liability company and is regulated by the Swiss Company Act, which operates under the Swiss Code of Obligations. The subsidiary is entirely independent of the parent company.

The necessary stages for starting business operations include:

  • Registering the company name in the relevant canton’s Commercial Register (Registre du Commerce) which is published in the Swiss Official Gazette of Commerce
  • Depositing CHF 20,000 (€19,272, US$21,780) in a Swiss bank account prior to incorporation
  • Providing resolution of the parent company to form a subsidiary in Switzerland
  • Registering at least one founder, an individual or entity, with no upper limit on numbers
  • Confirming at least one director is a Swiss resident
  • At least one director with single signatory responsibility, or two directors or officers with joint signatory power, must be resident in Switzerland
  • Appointing a local legal representative
  • Registering a local office
  • Providing notarized Articles of Association of the subsidiary in the relevant language for the canton, some of which allow documentation in English
  • Registering with the Federal Tax Administration for VAT if necessary
  • Obtaining relevant business licenses for area of operations

Other points to be considered include:

  • Federal corporate tax returns are due by March of the following year, but cantonal deadlines may vary
  • Boards of directors are elected by the shareholders. The Code of Best practice recommends three directors for companies up to 50 staff, five directors for companies with up to 500 employees
  • There are no restrictions of nationality, but at least one director (or two if the Articles of Association require two signatories) should reside in Switzerland, regardless of their nationality
  • There is no legal requirement regarding gender equality on boards, but Code of Best Practice recommend at least one female member on the board of small companies and two or three in larger companies

Expanding Business into Switzerland

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance?

Drawing up an international expansion blueprint is not enough. Your business plan will have to answer all these questions.

Switzerland welcomes foreign investment. However, the employment market is a mix of laws and collective agreements affecting employee benefits and entitlements. Further complications arise with variations between federal laws and those imposed by the country’s 26 cantons in French, German, and Italian regions. There are other questions too: where will you find distributors, manufacturers, and offices?

Swiss Business Facts

  • Capital – Bern
  • Population – nearly 8.75 million in 2021
  • Regions – Three geographical regions. Swiss Alps, the Central Plateau, and the Jura. There are 26 cantons with 2,929 municipalities
  • Official languages – French, German, Italian and Romansh
  • Economy and world ranking – Estimated end of 2021, GDP US$810 billion. Ranked 20th
  • Leading sectors by GDP – Service 74%, industry 25%, and agriculture 1%. Including finance and banking, food products, pharmaceuticals and chemicals, clocks and watches, luxury commodities
  • Main exports include – Banking, finance, and insurance (25%). Trade goods are gold, pharmaceuticals and chemicals, machinery, precision instruments, luxury goods including watches, jewelry, and clocks
  • Main imports include – precious metals and gemstones, products from pharma and chemical industry, machinery, electrical goods, and vehicles
  • Main trading partners – the European Union generally, Germany, US, UK, China, and France
  • Government – Direct democracy, federal republic, confederation
  • Currency – Swiss Franc (CHF)

Advantages and Challenges of the Swiss Market

Advantages of expanding into the Switzerland economy include:

  • Workforce: Well, educated, highly skilled, multi-lingual … enjoying freedom of movement throughout the European ‘single market’ even though Switzerland is not a member of the European Union
  • Economic Environment: Financially and politically stable, economically liberal in outlook. Switzerland has bilateral agreements with virtually every European nation
  • Logistics:  Landlocked Switzerland has borders with five neighboring countries – Germany, Italy, Austria, France, and Liechtenstein – with communication supported by outstanding road and rail networks which link with other nations to provide access to North Sea ports
  • Finance: Recognized as a world leader for banking, financial and insurance services with a reputation for high levels of integrity and discretion
  • Innovation: Hotbed for start-ups and small to medium-sized enterprises
  • Payments: The Single Euro Payment Area (SEPA) includes Switzerland and has simplified cross-border payments

Challenges of operating in the Swiss economy include:

  • Trade: Depends to a large extent on international trade and its finance sector
  • Lack of Uniformity: Not being a member of the European Union, incoming companies must be prepared for domestic rules and regulations in some sectors, rather than across the board EU legislation. There is increasing pace to harmonizing these issues, though
  • Business Culture: Hierarchical structure and slow decision-making can be frustrating
  • Permits: Negotiating the complex procedures for obtaining work permits, visas and quota restrictions

Limited Company / Subsidiary or Branch in Switzerland?

Foreign companies targeting Switzerland for international expansion typically select a Société á Responsabilité Limitée (SARL). In German cantons these are known as Gesellschaftmitbeschränkter Haftung (GmbH) and in Italian cantons as a Società a garanzia limitata (S.a.g.l). This type of company has the characteristics of a private limited liability company and is regulated by the Swiss Company Act, which operates under the Swiss Code of Obligations.

Subsidiaries and branches have differences in how they are registered and operate.

Swiss Employment Contracts

Foreign companies hiring employees in Switzerland must operate within a framework of federal legislation, plus regulations applied by whichever of the 26 regional cantons they are based or where they employ staff. Additionally, Collective Bargaining Agreement (CBAs) and trade union arrangements also provide safeguards and entitlements for the workforce.

The Code of Obligations, part of Switzerland’s Civil Code, incorporates most aspects of employment legislation relating to employee contracts, including dismissals, redundancies, notice periods and collective agreements. The Federal Labor Law’s role in the private sector deals with the details of working hours and breaks, holidays, maternity, and paternity leave, for example.

These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organisation (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.

General requirements apply to all contracts. These include:

  • Within one month of being hired, employees should receive written notice of the details of the contracted parties, start date, role, work location and schedule, salary, and payment frequency
  • The agreement must state whether the contract is indefinite / open-ended or fixed term
  • Contracts can be verbal or implied but some provisions that differ from statutory regulations, such as overtime or notice periods, are valid only if confirmed in writing
  • The contract must comply with all mandatory requirements and where they have been improved by collective agreements on relevant industries or sectors
  • The first month of any indefinite contract is deemed a probationary period, which can be ended by either party with seven days’ notice. Probationary periods can be extended to three months if this is confirmed in writing
  • There are no statutory requirements as to the language used in a contract, but the terms should be clearly understood by both parties

Other issues must be dealt with during the ‘contract phrase.’ These include:

  • Obtaining Power of Attorney to act as payroll provider and registering employees with the relevant canton
  • Filing forms with the Federal Tax Administration for remitting tax
  • Registering with the Federal Social Insurance Office (FSIO) and the federal social insurance system (AHV) and the pension fund (BVG)
  • The AHV 13-digit number (originally the OASI, Old Age and Survivors’ Insurance number) is now widely used as a Personal Identification Number (PIN) by all federal registers

Subsequently, employers will also have the following responsibilities towards their contracted staff:

  • Dealing with differing tax rates as they are applied federally, by 26 cantons and over 2,500 municipalities and in some cases the church; assessing liability where all four classifications of taxation apply
  • Withholding taxes due to the state, canton and municipalities at various percentages and transferring them to the authorities monthly or quarterly as required
  • Filing annual tax returns, generally by March 31 for most cantons, with the tax year running from January 1 until December 31

Employment Contracts in Switzerland

Apart from the specific terms, employees should be given written notice of the key elements of their agreement within the first month of employment. Although there are no legal requirements for the language used in a contract, the terms must be fully understood by all the parties, whatever their nationality or native tongue. The agreement should give details of the contracted parties, start date, role, work location and schedule, salary, and payment frequency.

Although contracts can be verbal, any provisions that differ from statutory minimums will be invalid if not confirmed in writing, and they must comply with any enhancements stipulated by collective agreements.

Professional sectors not covered by a collective agreement can be subject to a standard contract drawn up by federal or cantonal authorities, stipulating minimum wages among other statutory entitlements.

Open-ended, Permanent, Indefinite Employment Contracts:  Under the Code of Obligations, this is the standard type of contact which runs until ended by resignation, mutual agreement, or termination under employment law.

Fixed-Term Employment Contracts: The Code of Obligations sets no time limit for the duration of a fixed-term contract. However, if the employer and employee renew the contract beyond the originally agreed period a labor court may decide the agreement became open-ended. In this case entitlements to notice periods will apply as if it is an open-ended contract. Otherwise, the contract terminates on the last day of the agreement without the employer needing to give notice. Under the Code, employers cannot terminate the contract early by offering pay in lieu of the remaining period. Fixed-term contracts can also apply to a specific project.

Probationary or Trial Periods: The first month of an open-ended contract is deemed to be a trial period. Either party can terminate without reason, giving seven days’ notice. Trial periods can be extended to three months if this is in writing.

Part-time or Temporary Employment Contracts: These can be fixed-term or permanent and are based on hours, days or part-days worked. Employees generally have the same entitlements as full-timers, adjusted pro rata if necessary.

Collective Bargaining Agreements (CBAs):  These agreements are between employers’ associations and workers’ associations or trade unions. In Switzerland they apply across many sectors, specific companies, or regions. It is estimated over two million Swiss workers, around 40% of the workforce, are covered by collective agreements.

Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Switzerland might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Switzerland including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.

What are the Employee Benefits in Switzerland?

Benefits and entitlements for Switzerland’s employees are based mainly on the Code of Obligations, part of the Civil Code, which incorporates most aspects of employment legislation relating to employee contracts, including dismissals, redundancies, notice periods and collective agreements. The Federal Labor Law’s role in the private sector deals with the details of working hours and breaks, holidays, maternity, and paternity leave, for example.

These provisions are complicated in Switzerland, as the 26 individual cantons can also apply minimum requirements. Additionally, Collective Bargaining Agreement (CBAs) and trade union arrangements also provide safeguards and entitlements for the workforce.

Minimum guaranteed benefits, either from legislation or agreements, include such as:

  • Minimum wages
  • Paid vacations
  • Working hours
  • Termination, severance, and notice periods
  • Sick leave
  • Maternity allowances and benefits

Therefore, the responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.

What Compensation Laws exist in Switzerland?

Most of the legislation concerning the rights of employees and obligations of employers are drawn together under the Code of Obligations and the Federal labor Law. Collective Bargaining Agreements (CBAs) play a leading role in improving employees’ entitlements, alongside measures introduced by trade unions in negotiations with employer associations. Legislation includes:

  • The Code of Obligations:  These deals mainly with employment legislation concerning employee contracts, dismissals, redundancies, notice periods and collective agreements
  • Federal Labor Law:  This relates mainly to the private sector and deals with such as working hours and breaks, holidays, maternity, and paternity leave among other workplace issues
  • The Federal Act on Gender Equality: The Act applies to hiring, work role and conditions, pay, training, promotion, and termination. It decrees that discrimination cannot be based on marital or family status, including pregnancy
  • The Federal Act on Workers’ Participation:  This gives employees the right to information and consultation and, in the case of companies with more than 50 employees, the right to representation
  • The Occupation Benefits Act:  The Act stipulates that any employee earning at least CHF 19,350 (€18,530, US$21,054) must enroll with the second tier BVG pension scheme
  • The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.

Drawing up contracts is tricky enough, but in Switzerland it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Contracts can be verbal or implied but some provisions that differ from statutory regulations, such as overtime or notice periods, are valid only if confirmed in writing

Compensation, entitlements, and benefits include the following, all of which can be improved by collective agreements, but not diminished.

  • National Minimum Wages: Switzerland has no ‘national’ minimum wage, with rates varying between the 26 cantons. For example, the hourly minimum in Jura is CHF 20 (€19.30, US$21.80). Rates also depend on the type of work and the employees’ skills. Geneva canton, which includes Geneva city, has an hourly basic minimum wage of CHF 23 (€22.17, US$25), which can be upgraded for experience and qualifications – reputedly the highest hourly minimum in the world. This equates to a monthly minimum of CHF 3,772 (€3,636, US$4,108). The annual salary would be CHF 45,264 (€43,640, US$49,297).
  • Sick Leave and Benefit: The Code of Obligations states that employees unable to work through illness are entitled to sickness benefits depending on length of service. Entitlement is three weeks during the first year after working for four months, with proportionately extended periods for longer service. Employers can take out sick leave insurance to indemnify them against payments to their employees, who are also able to take out individual sickness insurance. Employees generally are paid 80% of their salary. Entitlements vary between the 26 cantons.
  • Working Hours and Breaks: Under the Federal Labor Act, industrial workers, office, technical and sales staff are limited to 45 hours maximum, with 50 hours the upper limit for other employees, including overtime. Employees receive 15 minutes break after working 5.5 hours; 30 minutes for working seven hours and one hour within a daily working stretch of nine hours. These breaks are paid if employees are not allowed to leave the workplace. Employees have a minimum 11 hours’ rest per day, possibly reduced to eight hours if the 11-hour minimum is averaged over two weeks. The Code of Obligations stipulates at least one day off per week, generally a Sunday. Employees can agree to two half-days off instead of a full day.
  • Overtime: The two categories are overtime and extra hours. ‘Overtime’ applies when working hours exceed the contracted maximum of 45 or 50 per week. Employees are paid 125% of their normal hourly rate, with time off in lieu an option. Overtime must exceed 60 hours annually for technical, sales staff and those in large retail outlets to be eligible. ‘Extra hours’ apply when statutory maximum hours of 45 or 50 per week are exceeded. Extra hours should not be more than two per day, 170 each year for a 45-hour week and 140 annually for a 50-hour week. Employees receive 25% above their normal hourly rate for the extra hours. Time off in lieu can be agreed
  • Paid Vacations: Full and part-time workers receive a minimum four weeks paid vacation annually. Employees up 20 years old are entitled to five weeks and over-50s can also receive more than the statutory minimum. CBAs or individual contracts can improve entitlement. Vacation days can be postponed if employees fall ill or suffer injury during their vacation. Outstanding days can be taken during notice periods unless it is agreed to take payment in lieu.
  • Maternity Benefit and Leave: Leave is 14 weeks with six before birth and a minimum of eight post-natal. In Geneva the total allowance is 16 weeks. Benefit is 80% of average salary capped at CHF 196 (€190, US$213) per day but mothers must have worked at least the previous five months and be insured via the AVS fund. Benefit is salary, so contributions are deducted for social insurance funds. Employees are paid by their employer, while self-employed and unemployed access benefit through the AVS
  • Paternity Benefit and Leave: As of January 1, 2021, fathers are entitled to two weeks’ paid leave within six months of the birth of their child. Paternity leave is funded through the earnings compensation scheme (EO). Leave can be taken in one block or in separate days, including weekends; therefore, the total allowance of 14 days comprises 10 workdays. Paternity leave is in addition to annual leave and any notice period must be extended to allow the full quota of paternity leave. Compensation is 80% of average salary prior to the birth to a maximum of CHF 2,744 (€2,645, US$2,987) over the 14 days
  • Termination and Severance: All employees are subject to legislation applying to termination, which is not allowed while the employee is unable to work through illness or injury (for specified periods increasing with seniority); is pregnant or in the 16 weeks after giving birth; on military service, among other reasons. Statutory entitlement to severance applies only to employees over the age of 50 with 20 years’ service and if there is a shortfall in pension contributions. In this case, severance payments equal from two to eight months’ pay, but packages are usually contractually agreed.
  • Notice Periods: Unless contractually agreed or governed by collective agreements, notice periods are a minimum of one month following the end of the current calendar month. Two months’ notice applies between the second and ninth year of service and three months thereafter. The first month of employment is considered a trial period, which can be extended to three months, if confirmed in writing, and terminated at any time with seven days’ notice.

Swiss Top Talent

Finding and recruiting top talent in any overseas territory poses many potential trip wires for companies taking steps to build their international profile.

This is certainly the case in Switzerland, one of the world’s wealthiest nations with a highly educated and qualified workforce. Unemployment steadily fell throughout 2021 to a low of around 2.5% towards the end of the year, adding to an already competitive employment market.

These attractions – and the challenges they bring – underline why Bradford Jacobs’ global experience is indispensable for taking the smartest recruitment route into Switzerland – ideally placed for international expansion among EU members and further afield.

Bradford Jacobs’ benchmark platforms as a Professional Employer Organisation (PEO) have worldwide reach and include a total understanding of the challenging complexities of Switzerland’s economy and employment market. You can trust Bradford Jacobs to put the brightest talent in place for your company.

The Recruitment Process in Switzerland

Job-seeking in Switzerland? A first step will be to understand the employment market and its leading sectors. The business landscape is dominated by small to medium-sized enterprises (SMEs). The service sector accounts for over 75% of Gross Domestic Product, primarily in banking, finance, and insurance, with the bulk of the balance taken by industry.

Switzerland has no national minimum wage, but average salaries are among the highest in the world – with a cost of living to match. The workforce is highly qualified and well-educated … facts to bear in mind for incomers. Adjustments may also be necessary to a formal business environment with work cultures and etiquette that can vary between the German, French and Italian-speaking regions.

Remember also that although Switzerland is not a member of the European Union it is part of the ‘single market’ and therefore there is free movement to live and work throughout the economic bloc for Swiss and EU citizens.

Recruitment agencies are often sector-specific, with the built-in advantage of understanding the employment market in detail and where to find – and place – candidates with relevant skills.

Employers and jobseekers also have the option of registering with Regional Employment Centers (RAV), which hold databases of highly skilled professionals as well as companies that are looking to fill positions.

Switzerland is also a member of EURES, the ‘job bank’ that links employers and potential candidates across the EU’s freedom of movement employment market. Switzerland’s National Coordinating Office for EURES comes under the State Secretariat for Economic Affairs.

New arrivals can be reassured that Switzerland provides a comprehensive framework of regulations and statutes that safeguard employment rights.

Recruitment is the first stage of making your company operational and competitive in Switzerland.

Legal Checks on Employees in Switzerland

  • Scope:  Most checks are permissible, provided they are related to the position being applied for and are made with the applicant’s permission.
  • Medical Checks: Allowed where the workload demands a certain level of health and fitness
  • Drug Screening: Permitted only where relating to specific roles
  • Credit Checks: These must be relevant to positions such as banking, finance, or attorneys
  • Social Media:  Accounts cannot be accessed by potential employers and used as part of a screening process
  • References and Educational Qualifications: These can be verified with the applicant’s permission
  • Criminal Records:  Can be requested in relation to roles such as childcare, but the information cannot be stored electronically due to data protection requirements

Required: Ensuring applicants have the correct visas and work permits assigning the right to live and work in Switzerland.

Basic Facts on Hiring in Switzerland

Companies hiring staff for expansion into Switzerland must comply with a framework of employment, contract and registration regulations that are applied at state and cantonal level. Some areas are not subject to mandatory federal regulations, which is when collective and trade union agreements can come into play. Basic requirements include:

  • Within one month of being hired, employees should receive written notice of the details of the contracted parties, start date, role, work location and schedule, salary, and payment frequency
  • Contracts can be verbal or implied but some provisions that differ from statutory regulations, such as overtime or notice periods, are valid only if confirmed in writing
  • The contract must comply with all mandatory requirements and where they have been improved by collective agreements on relevant industries or sectors
  • Employees in manufacturing and processing companies must have access to their policies on health and safety. Where necessary disciplinary policies should also be available
  • Contracts should stipulate whether they are fixed term or indefinite
  • Probation periods, normally one month, can be extended to three months if written into the agreement

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. Some are covered by federal legislation, others implemented by Switzerland’s 26 cantons. Collective agreements can also improve statutory minimum standards but cannot undercut them.

Companies must establish a legal entity in Switzerland in order to operate payroll for their employees. The typical choice is for a private limited liability company, Société á Responsabilité Limitée (SARL), to operate under the Swiss Companies Act, although opening a branch is another option. Registration procedures include:

  • Registering the company name in the relevant canton’s Commercial Register (Registre du Commerce) which is published in the Swiss Official Gazette of Commerce
  • Depositing CHF 20,000 (€19,272, US$21,780) in a Swiss bank account
  • Registering at least one founder, an individual or entity, with no upper limit
  • Confirming at least one director is a Swiss resident
  • Appointing a local legal representative
  • Opening a local registered office
  • Providing notarized Articles of Association of the subsidiary
  • Registering with the Federal Tax Administration
  • Applying for relevant business licenses for area of operation

Once staff have been hired, the employer’s responsibilities include:

  • Filing forms with the Federal Tax Administration for remitting tax
  • Registering with the Federal Social Insurance Office (FSIO) and the federal social insurance system (AHV) and the pension fund (BVG)
  • Dealing with differing tax rates as they are applied by the state, by 26 cantons and 2,250 municipalities and in some cases the church
  • Assessing liability where all four classifications of taxation apply and withholding taxes due to the state, cantons and municipalities at various rates and percentages each month
  • Remitting withheld taxes monthly or quarterly as required
  • Filing annual tax returns, generally by March 31 for federal authorities and most cantons, with the tax year running from January 1 until December 31

Work Culture

To succeed in business in Switzerland, it is vital for both employers and employees to have a strong understanding of the business culture.

As a global PEO (Professional Employment Organisation) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Swiss work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Switzerland to start your expansion well-informed.

The Switzerland is among the world’s richest nations. At the sharp end of the employment market the workforce is well educated, highly skilled and commands top salaries to support an enviable but expensive lifestyle.

The Swiss ranked 20th globally with Gross Domestic Product (GDP) of 810.8 billion US dollars for 2021 and third in the world for GDP per capita at US$93,500.

Switzerland’s traditional business reputation revolves around banking, finance, and insurance. These account for the bulk of the services sector, which comprises over 75% of GDP. Switzerland’s industrial sectors focus on manufacturing machinery, pharmaceutics, chemicals, textiles, precision instruments and tourism. It is home to many of the world’s major multi-nationals, but at the other end of the scale is a hot bed for start-ups, innovative company launches and Small and Medium Enterprises (SMEs).

Incomers must adjust to a work culture that reflects French, German, and Italian regions, with many employees ‘commuting’ from the surrounding nations. Remember also that although Switzerland is not a member of the European Union it is part of the ‘single market’ and therefore there is free movement to live and work throughout the economic bloc for Swiss and EU citizens. However, in the ‘job search stakes’ the Swiss are always front-runners compared with applicants from other nations.

Ready for the challenge?  Now it is time to get down to business. So here are a few tips on taking the right steps and avoiding the pitfalls!

  • Language: Switzerland has four official languages, the internationally recognized Italian, French and German, plus Romansch
  • Punctuality: Being on time for meetings and appointments is essential as far as the Swiss are concerned, for both business and social life – which they tend to keep entirely separate
  • Attitudes: Despite having three regions that may reflect individual national traits, there are some definite Swiss characteristics – a conservative and formal approach prevails in business culture, while communication is polite, but direct
  • Business Environment: Decisions are reserved for the top levels of management in what remains a generally hierarchical business structure
  • Negotiations: The Swiss expect a focused and well-structured presentation at meetings, which will be carried on in the same vein and stick to the agenda. Be patient, as negotiations will proceed at a cautious pace
  • Greetings: Frau, Madame, Signora … Herr, Monsieur or Signor – match titles to the relevant region for your meeting and use with the surname or family name until invited to be more familiar. Shake hands, maintain eye contact
  • Dress Code: Smart and conservative initially at least … although if the relationship develops to spending time in their workplace, well ‘turned out’ casual is becoming more acceptable
  • Socializing: Although the Swiss do not readily mix work and pleasure, a business lunch or dinner is likely to be part of the developing relationship
  • Gift-giving: Acceptable at the conclusion of the deal but keep it modest and thoughtful. Despite the country’s wealth, the Swiss tend to shy away from ostentatious displays

Switzerland’s Minimum Wage

Switzerland has no ‘national’ minimum wage, with rates varying between the 26 cantons. For example, the hourly minimum in Jura is CHF 20 (€19.30, US$21.80). Rates also depend on the type of work and the employees’ skills. In all regions bar Geneva, for example:

  • Unskilled workers with four years’ experience – CHF 21.10 (€20.34, US$23) per hour
  • Skilled with relevant diploma or three years’ vocational training – CHF 23.20 (€22.36, US$25.26)

Geneva canton, which includes Geneva city, has an hourly basic minimum wage of CHF 23 (€22.17, US$25), which can be upgraded for experience and qualifications – reputedly the highest hourly basic minimum in the world. This equates to a monthly minimum of CHF 3,772 (€3,636, US$4,108). The annual salary would be CHF 45,264 (€43,640, US$49,297).

Probation Periods in Switzerland

The first month of an open-ended contract is deemed to be a trial period. Either party can terminate without reason, giving seven days’ notice. Trial periods can be extended to three months if this is in writing.

Working Hours in Switzerland

Industrial workers, office, technical and sales staff are limited to 45 hours maximum, with 50 hours the upper limit for other employees, and both totals include overtime. Working hours are usually governed by individual contracts and collective agreements, with the average working week actually around 41.5 hours.

Under the Federal Labor Act, employees receive 15 minutes break after working 5.5 hours; 30 minutes for working seven hours and one hour within a daily working stretch of nine hours. These are paid as working time if employees are not allowed to leave the workplace. Employees are entitled to a minimum of 11 hours’ rest per day, although this can be reduced to eight hours provided the 11-hour minimum is averaged over two weeks. The Code of Obligations stipulates at least one day off per week, which generally should be a Sunday. Employees can agree to two half-days instead of a full day.

Overtime in Switzerland

The two categories are overtime and extra hours. ‘Overtime’ applies when working hours exceed the contracted maximum of 45 or 50 per week, according to the sector. Employees receive a premium of 125% of their normal hourly rate, but time off in lieu is another option. Overtime must exceed 60 hours annually to apply to technical, sales staff and those in large retail outlets.

‘Extra hours’ apply when statutory maximum hours of 45 or 50 per week are exceeded, depending on the sector. Extra hours should not be more than two per day, 170 annually for a 45-hour week and 140 per year for a 50-hour week. Employees receive 25% above their normal hourly rate for the extra hours. Time off in lieu can be agreed.

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